After dropping below growth neutral for 20 straight months, the Creighton University Rural Mainstreet Index remained above the 50.0 threshold for May and June according to the latest monthly survey of bank CEOs in rural areas of a 10-state region
dependent on agriculture and/or energy.

Overall: The index, which ranges between 0 and 100, dipped to 50.0 from 50.1 in May. Prior to May, the last time the overall index was at or above growth neutral was August 2015.

"Stabilizing and slightly improving farm commodity prices helped push the overall index at or above growth neutral for the last two months," said Ernie Goss, Jack A. MacAllister Chair in Regional Economics at Creighton University's Heider College of Business.
"Though grain prices remain below breakeven for most farmers, recent improvements in cattle and hog prices have boosted the overall index for Rural Mainstreet Economy to growth neutral."

One bank CEO reported the recent rally in cattle prices, has been a positive with early contracts.

Jim Eckert, president of Anchor State Bank in Anchor, Ill., said, "Crops in Central Illinois are looking better than in other areas of the state, but the area is much dryer than north or south and there is not much prospect of rain in the immediate future."

Farming and ranching: The farmland and ranchland-price index for June rose to 40.0, its highest level since September of last year, and up from May's 36.4. This is the 43rd straight month the index has languished below growth neutral 50.0.

This month, and in August 2016, bank CEOs were asked to project the change in farmland prices for the next year. On average, bankers this month projected a 3.1 percent decline in agriculture over the next 12 months. This is a significant improvement from
August when bankers expected a decline of 7 percent for the next 12 months.

The June farm equipment-sales index fell to 26.2 from 26.8 in May. This marks the 46th consecutive month the reading has fallen below growth neutral 50.0.

Banking: Borrowing by farmers was very strong for June as the loan-volume index climbed to 78.3 from last month's 74.5. The checking-deposit index was unchanged at 48.9, while the index for certificates of deposit and other savings instruments sank to 41.3
from 46.6 in May.

Due to weak farm income, almost one fourth of bankers report rejecting a higher percentage of farmer loan applications and approximately 60.9 percent reported boosting collateral on farm loans.

However, James Brown, CEO of Hardin County Savings Bank in Eldora, Iowa, indicated bank reactions have been complex. Brown said, "The vast majority of our farm customers have not been asked for additional collateral and have not required any
restructuring. If we have another year like the last two, there will definitely be some."

Hiring: The job gauge dropped to a still strong 58.9 from May's 60.1. Rural Mainstreet businesses not linked to agriculture increased hiring for the month at a healthy pace.

Confidence: The confidence index, which reflects expectations for the economy six months out, expanded to a weak 48.9 from 46.6 in May, indicating a continued pessimistic outlook among bankers. "As livestock prices have improved, banker's economic
outlook has advanced, but still reflects lackluster economic confidence," said Goss.

Home and retail sales: Home sales moved higher for the Rural Mainstreet economy, but at a slower pace than for May. The June reading decreased to 58.8 from May's very healthy 63.6. The June retail-sales index plummeted to 41.3 from May's 48.9. "Much
like their urban counterparts, Rural Mainstreet retailers are experiencing significant pullbacks in sales," reported Goss.

Each month, community bank presidents and CEOs in nonurban agriculturally and energy-dependent portions of a 10-state area are surveyed regarding current economic conditions in their communities and their projected economic outlooks six months down
the road. Bankers from Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming are included. The survey is supported by a grant from Security State Bank in Ansley, Neb.